Discipline is key to maintaining a captive, according to a panellist at the Vermont Captive Insurance Association Annual Conference in Burlington.
The panel discussed the best practices that companies should use to maintain their captives.
Mary Ellen Moriarty, vice president of property and casualty at Educational & Institutional Insurance Administrators, which oversees captives for schools and colleges, believes that captives fail because they get excited about the development of surplus and try to find ways to reduce premiums, or to a way to return money to members.
She continued, saying that the key to maintaining captives is to be disciplined and price risk for what it is.
Leslie Ratley-Beach of the Land Trust Alliance, which oversees the Terrafirma Risk Retention Group in Vermont, said that for Terrafirma, members of the committee have an interest in ensuring the dual goal of keeping captives relevant and financially solvent for members, while maintaining stability.
The third panelist, Anne Marie Towle, vice president of the North America captive consulting practice at Willis, believes that a focus on and analysis of growth, to look at key drivers and how to interpret them, is equally important as companies continue to evolve and consider making potential changes to their captives.
She added that companies tend to rely on their captive managers because “the captive manager sometimes acts like the quarterback” in discussions with everyone from the regulator to the advisory committee.
“Talk with your insurance consultant, and make sure everything is operating smoothly, according to the business plan and regulators.”
